Pengxin, Synlait founders offer $85.7M for Synlait Farms

Pengxin, Synlait founders make $85.7 mln offer to take
over Synlait Farms

By Paul McBeth

Oct. 18
(BusinessDesk) - Shanghai Pengxin, which bought the Crafar
family farms in a controversial deal last year, and the
Synlait founders are offering $85.7 million to buy South
Island dairy farmer Synlait Farms.

SFL Holdings, a joint
venture between Pengxin and Synlait Farms chief executive
Juliet Maclean and director John Penno, is offering $2.10 a
share to Synlait Farms investors in a full takeover bid for
the company which operates 13 dairy farms and a total herd
of almost 13,000 cows. That’s a 31 percent premium to the
$1.60 price the shares last traded at on the Unlisted
platform.

If the takeover is successful, SFL plans to
inject a further $20 million in fresh capital to reduce debt
and accelerate investment. It also plans to reinvest all
surplus cash to fund further growth. Penno and Maclean will
hold about 26 percent of SFL, with Pengxin owning the rest
via New Zealand Standard Farm, a subsidiary of its Milk New
Zealand unit.

The deal emerged after Synlait Farms’
board assessed several proposals to strengthen the
company’s balance sheet and fund future growth. Synlait
Farms founders Penno, Maclean and Ben Dingle have agreed to
sell their 50.2 percent stake into the offer.

“NZ
Standard Farm’s proposal was assessed by the board as
being the most attractive and the highest value proposal
received, and we are pleased that Juliet and John have
joined NZ Standard Farm in the partnership through SFL
Holdings,” chairman Barry Brook said in a statement.

The
formal takeover offer is expected to be made next month,
with an expected initial closing date of Dec. 6. The offer
will be conditional on SFL achieving 90 percent ownership
and approval from the Overseas Investment Office.

Pengxin’s purchase of the 16 Crafar family farms was
met with widespread opposition as political parties ramped
up pressure on the government over the sale of large tracts
of farm land to foreign interests, particularly Chinese.

Synlait Farms supplies about a tenth of listed dairy
processor Synlait Milk’s needs. The companies were founded
together in 2000, sharing some common ownership until 2010,
and Synlait Milk listed on the local stock exchange this
year.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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